McDonald’s subject to EC competition complaint
McDonald’s faces another European regulatory headache after it was the subject of a competition complaint in Brussels.
Three Italian consumer groups backed by a coalition of trade unions from across the continent, including the UK’s Bakers Food and Allied Workers Union, allege that the fast-food giant abuses its dominant market position. They claims franchisees are forced to agree to unfair and draconian contract terms, which also hit consumers by driving up prices.
Specifically, says the Independent, the complaint states that “McDonald’s is the only fast-food company that requires franchisees to lease property owned by the franchisor” and moreover, that it charges “excessive rents”. It adds “66 per cent of the restaurant chain’s revenue from franchisees in Europe comes from collecting rent”.
The groups are also angry at provisions within franchise agreements that preclude restaurant owners from switching to other brands “by including measures such as non-compete clauses”, notes the Daily Telegraph. They reckon McDonald’s could be fined as much as 10 per cent of its global earnings, which, based on 2014 numbers, would equate to $9bn (£6bn).
McDonald’s did not respond to the specific allegations but said it “has helped create the best business opportunities” for its franchisees and “the best overall experience” for customers.
“We are proud of our franchisees and are committed to working closely together so that they have the support they need to operate their restaurants and their businesses,” said a spokesman.
The European Commission confirmed it had received the complaint and said it would look into the matter. The news comes after the commission revealed it was opening an investigation into an apparent “sweetheart” tax deal McDonald’s enjoys in Luxembourg that might be so generous as to constitute illegal “state aid”.
